Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Tuesday, 1 March 2016

Commodity prices rise in February

Rare gains

Not something that has been said too often since commodity prices peaked in July 2011, but the Reserve Bank's Index of Commodity Prices increased by +1.2 per cent in February, driven by the respective prices of iron ore and gold. 

When using spot prices in place of export prices for the bulk commodities, the index is up more significantly by +2.9 per cent. 


In Aussie dollar terms the Index of Commodity Prices has increased by +2.9 per cent over the past two months. 

It's worth noting that using spot prices the index is up more strongly by +6.9 per cent in 2016 to date, with the bulk commodities index using spot prices rebounding by +11.4 per cent after some gigantic declines previously.


Looking at the the index weights below, if the gains are to continue in March hopes will likely be pinned upon the price of oil, gas, iron ore and gold, in particular. 


Iron ore futures hit their upside limit today, but you'd be a brave soul to bet heavily against the downtrend.

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National Accounts and GDP tomorrow! NAB thinks we'll see +2.7 per cent growth in the economy for 2015. I'll take the low side of that bet.

Futures markets are seeing two interest rate cuts this year, which will likely drag a few more savers kicking and screaming into the risk assets.